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Denver International Airport's airlines have warned that rising costs could severely affect their reliance on Denver as a hub for connecting flights.

Their complaint prompted a letter from DIA finance chief Patrick Heck defending the airport's budget and disclosing that "critical maintenance" had been postponed in an effort to keep costs down (read letter).

In an August 2013 letter to Heck, a committee representing the airlines expressed "a general message of concern" about the airport's 2014 budget and future budget increases once its showcase redevelopment project is completed (read letter).

"DIA is in a unique position of having three major hub carriers with close to half of the DIA traffic connecting," wrote Jeff Campbell, chairman of the Denver Airlines Airport Affairs Committee.

"This connecting activity is much less certain than origination/destination traffic, and we are concerned that if costs rise at DIA too steeply, activity may begin to drop steeply as well. This can quickly result in a cost spiral with severe consequences. We do not want to see that happen in Denver."

A Denver Post investigation into DIA's finances, published in March, found that the airport reduced spending on runway repairs and other long-term maintenance projects as the cost of its terminal redevelopment grew. DIA officials denied there are overruns or that there is any connection between project costs and maintenance cuts.

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Jeanne Faatz, a Denver City Council member who has questioned DIA spending, said she was unaware the airlines had complained about airport budget increases.

"If the airlines are concerned, we need to understand that concern," she said. "Their well-being and their happiness is connected to our well-being."

Airlines manage movable operations and run on thin profit margins. If the Denver airport becomes too costly, carriers can take their flight service elsewhere.

Three airlines — United, Southwest and Frontier — use Denver as their Rocky Mountain hub, making DIA the nation's fifth-busiest airport. That lowers fares and increases direct flight options.

The airlines offer nearly 563,000 flights yearly connecting through Denver to 185 cities and pay about two-thirds of the airport's $370 million budget.

Airline analyst Robert Mann questioned how long Denver can support such a high number of flights for its market size.

"Where you have a good, strong hub, you have to have a really strong business community. Denver doesn't have that business traffic and spending power," Mann said. "The industry is at one of these inflection points. ... Now is probably not the ideal time to be betting the farm."

The airlines' letter complained that DIA's 2014 budget grew 4.1 percent despite a decrease in the number of flights, and that the airport took a year-end savings of $10 million from staff vacancies and spent it elsewhere.

This new approach, Campbell wrote, "actually increases spending above the 4.1 percent mark." He added that airport expenses to accommodate its new facilities "will simply be compounding already large budget increases."

The airport is building a luxury hotel, glass-covered public plaza and train station at the south end of the main terminal. Airport officials estimate the project will cost $544 million, plus $128 million in what they call related costs.

In a cost spiral, one or more airlines reduce flights at an airport, causing it to raise fees on the remaining flights, which in turn induces the airlines to relocate more flights.

That "is a concern that we talk about constantly," Heck told The Denver Post. The airlines worry about Denver's competitiveness "if costs grow over a very long term," he said, calling that unlikely.

In 2013, the airlines again reaped the maximum $40 million from a revenue-sharing agreement with the airport, according to Heck.

"This budget I don't think took us out of the competitive realm. I feel we are very much in a safe margin," he said.

A financial analysis done for DIA predicted that in 2018, it will have the fifth- highest cost per enplaned passenger among 14 large airports studied. Among the airports expected to charge passengers less: Houston, Las Vegas, Dallas, Phoenix and Salt Lake City.

A separate national analysis by aviation consultants predicted Denver airline fees will be closer to the middle among large hub airports.

Heck said the airport has not yet calculated how much its operating budget will grow once the terminal project is completed, but the airport forecasts its hotel will be profitable.

Airport manager Kim Day called the DIA budget a balancing act between expenses for operations, maintenance and growth and a desire to keep costs low for the airlines.

"These often conflicting goals, both of which have long-term impacts, are part of every financial decision we make," she said.

In a letter to Campbell, Heck noted the airport had lowered the yearly growth of its budget significantly since 2011 in an effort to keep costs low for the airlines. "One of the consequences of that has been the deferral of critical maintenance that is included in the 2014 budget," he wrote.

Heck told The Post that much of the $10 million saved from unfilled staff positions was spent on maintenance projects.

Airport officials have previously denied that critical maintenance was deferred during construction of its terminal project.

In an effort to control costs, airport management asked, "What things can we stop doing right now?" Heck said. That included "stuff we knew we would have to do but didn't absolutely have to be done that year."

Airport spokeswoman Stacey Stegman cited heating and air conditioning repairs and grease trap cleaning from airport concessions as examples of deferred projects. The airport plans to repair or replace 30 grease traps, at a cost of $200,000 to $500,000 each, after one failed.

While most airport managements maintain a push-pull relationship with airlines, Campbell implored Heck to understand that his letter not be "construed as predictable complaining by the airlines over the budget," saying, "we believe there is a much more salient cost issue at DIA."

The letter, along with a draft analysis estimating how much it will cost Frontier Airlines to use DIA, was given to The Post by an anonymous source.

Campbell declined to comment about his letter. The financial analysis, done for Frontier by WJ Advisors, estimates the airline's net costs per enplaned passenger at DIA will grow 44 percent in the coming decade before declining again.

Frontier, which pays a below-average rate for space at the airport, told The Post "we are still Denver's hometown airline, and our new owners have said that they plan to keep the headquarters here."

Heck said he doubts a projected increase in charges per passenger will affect Frontier's future at DIA because those fees amount to a small portion of overall airline costs.

"Is that a reason for them to pull out of a market?" he asked. "My general sense is no."

David Olinger: 303-954-1498, dolinger@denverpost.com or twitter.com/dolingerdp

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